United
States building permits on an annual basis have fallen a
further 9% to 513,000 – which with its population of
approximately 305 million – represents a residential
building permitting annual rate / per thousand population of
a meager 1.68 / 1000.

At the “bubble peak”
housing starts on an annual basis in the United States
peaked at 2.27 million units in January 2006 – and based
then on a population of 300 million – this represents a
build rate per thousand population of 7.56.

As the
bubbles were inflating – this fueled much “bubble
building” – where inappropriate and grossly inflated new
stock was created –not the affordable new stock that would
be created within normal affordable markets – such as
Atlanta, Dallas Fort Worth and Houston.

Economists
generally have confused this “bubble stock” as normal
oversupply, when it clearly is not. Much of it will be
grossly inflated and inappropriate new residential
stock.

The total residential stock in the United
States is approximately 127 million units – around 75
million owner occupied, some 32 million rentals and 10
million “other” (second / holiday homes etc) – so that
conservatively – at least 0.5% - or 635,000 units of this
stock (depending on age within specific markets) should be
replaced annually.

This represents a replacement
build rate of 2.08 / 1000 population annually. The generally
accepted replacement build rate is between 2 to 3 units per
thousand population annually – again depending on the
overall age of the housing stock within specific urban
markets.

So – the United States overall is
currently permitting below its replacement rate.

If
other countries were permitting at the current United States
rate of 1.68 / 1000 population – the situation would be as
follows –

1) Australia – with a population
of 21 million and a residential permit rate the United
States is currently experiencing of 1.68 / 1000 would only
be permitting 35,280 units – not the current 120,000 or
so. The Australian “housing bubble is the worst in the
English speaking world – where this years Demographia
Survey illustrated that its major urban markets Median
Multiple was 6.3.

2) New Zealand – with a
population of 4.3 million and a residential permitting rate
the United States is currently experiencing of 1,68 / 1000
population per annum – would only be permitting 7,224
units annually. February 2009 permits were 1000 –
suggesting that permits through this year could be in the
order of 12,000. At its “bubble peak” mid 2004 – it
had exceeded 30,000 on an annual basis. Its current Median
Multiple for its major urban markets is 5.7 – just behind
Australia.

3) Republic of Ireland – with a
population of 4.4 million and a residential permitting rate
the USA is currently experiencing of 1.68 / 1000, just 7,392
units would be permitted on an annual basis. At its
“bubble peak” – Ireland was permitting near 90,000
units annually and may only permit 20,000 units during 2009.
Unresponsive planning and extremely poor quality governance
at the national and local level, triggered the Irish housing
bubble. Essentially – while the American companies drawn
their by tax incentives, created the wealth – the Irish
themselves “blew it” with poor quality and too often
corrupt governance, by getting a massive housing bubble
underway.

4) United Kingdom – UK Government
estimates are that the United Kingdom, with a population of
approximately 61 million will likely only put in place
around 100,000 units this year ( build rate 1.63 / 1000)
according to Government estimates – while industry
estimates are much lower at 40,000 units (0.65 / 1000) this
year. With respect to housing – the United Kingdom is the
“basket case of the developed world” – even worse than
California. Building costs are astronomical and the average
size of new residential builds in the UK has fallen to 76
square metres – slightly smaller than the East German
Soviet era slab developments, where it is estimated around
1.5 million of these units have been vacated, since the
reunification of East and West Germany.

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